Lisk Consensus Model and The Eternal Dilemma

The Lisk network is far from perfect: recurring topics in the Lisk community channels regard the alteration of the consensus algorithm, the centralization of the system and the high fees of the network. Are these real problems? Could the Lisk network benefit from these changes? This article analyses the key points of the issues, the proposals to improve them and the position of the Lisk Foundation on the different matters.

Dynamic Fees

Differently from the other two issues, this problem is globally recognized. Nowadays the fees on the Lisk network are very high. The high cost of transaction means that it is really expensive for small investors to vote for delegates, as the average shared reward is too low and the voters need to wait for a long period of time (depending on their stake, e.g. 1 month if you hold 1000 Lisk) to make profits or even reach a break-even point on their investment on delegates. Changing the fee system is one strategy that the Foundation has been taking into account: thanks to a system of dynamic fees it would be possible to know in advance the lowest fee that can be paid for a transaction. This will make possible for small and medium investors to vote for delegates, change their current votes and actively participating in the Lisk ecosystem, indirectly improving the decentralization of the network. For more in-depth information on the dynamic fee system feel free to take a look at this explanation: https://www.youtube.com/watch?v=w27spPqKvyI

Change of consensus

Would it be possible to alter the current consensus, by increasing or diminishing the number of delegates? Technically yes, the Lisk Foundation could work on it, but this initiative could have a lot of different consequences.

Furthermore, the first proposal wouldn’t really improve the current system, as anyone will still be able to propose a delegate and it will be impossible to prevent current delegates from running another node. Instead, this effort will probably result in a more centralized system. Other DPos, such as Ark and Rise chose to move in another direction, allowing only one vote for each wallet. Looking at the way other DPos system solved the centralization issue could bring interesting insights and solutions. It is also important to mention that changes to the fee system could also bring benefits to the consensus, as more and more people could vote and people could easily change their votes. Therefore, the two issues can be seen as linked. Improvements to the first issue will most likely result in improvements to the second one.

Delegates Cartels

The Lisk platform often receives a great deal of criticism for being more centralized than other platforms (more than 50% of Lisk is owned by a small group of people). As a result, there’s been talks of a “delegate cartel”, by which delegates leverage their voting power to vote for themselves.

Indeed, among the proposed solutions (in addition to dynamic fees and changes of consensus) there’s the possibility of introducing a limit of votes, for example allowing one vote per voter.

Giving voting right to anyone holding more than 50-100 Lisk, thanks to lower fees or higher reward distributions, it would be possible to enlarge the voting population.
The Lisk Foundation is very well aware of the problem; they’re very active on many communication channels and involved in discussions with the community to brainstorm about possible solutions.

To conclude, we can argue that currently the Lisk platform is experiencing several problems of centralization and regarding the management of the DPos system and the delegates. This article
highlighted three main issues: high fees, changes of consensus and centralization of delegates. However, these three topics shouldn’t be seen as separate issues, but rather as interconnected. By working on one of them, the positive improvements will steam to the other issues, improving them and eventually solving these problems.
Stay tuned, as possible solutions are already work in progress; the Lisk community is very transparent and ongoing developments are always posted on their communication channels.